TNK-BP oligarchs eye stake in BP in return for exit from joint venture

The oligarch co-owners of TNK-BP want to swap their holdings in the joint
venture for shares in BP, according to Mikhail Fridman, who this week
resigned as chief executive of the Anglo-Russian oil producer.

Oligarch TNK-BP shareholder Mikhail Fridman said a third investor could join the venture.

Mr Fridman and fellow billionaires in the Alfa-Access-Renova (AAR) group own half of TNK-BP and are battling the British company for control of the lucrative venture.

TNK-BP’s 50:50 shareholder structure “no longer serves the interests of each party” and either BP or AAR should control it, Mr Fridman told Kommersant.

“Everything is possible and realistic,” he said, suggesting that a third investor could join the venture. “We are open to proposals.

"There are a lot of different options. For example, BP becomes a minority shareholder and gradually leaves TNK-BP’s capital... We would also consider cutting our stake if part of it is to be converted into BP shares.”

The suggestion of AAR taking a stake in BP is likely to be regarded by the British company as wishful thinking on the part of the oligarchs, who were offered a similar deal last year but frustrated its completion at the eleventh hour.

BP believes the oligarchs regret frustrating the deal and may wish to resurrect it.

However, last year’s offer was an attempt by BP to salvage its Arctic exploration tie-up with Rosneft, which AAR had blocked. The prize for BP of access to those Arctic fields has since been taken by Exxon Mobil.

It is not clear whether Rosneft would still be interested in buying out AAR.

Igor Sechin, the Russian energy tsar who brokered last year’s Arctic tie-up and fell from grace when it collapsed, was last week put back in charge of Rosneft, sparking speculation it could expand its asset base and take another look at TNK-BP.

But Mr Fridman rejected suggestions that he had resigned as TNK-BP chief executive in anticipation of Sechin making a move on AAR’s stake, dismissing the idea of a Rosneft-TNK-BP merger as “fantasy”.

Meanwhile, BP faced warnings from London analysts that its management needed to “up its game”.

Stuart Joyner of Investec wrote: “We detect increasing frustration among investors at the pace of structural change within BP where management decisions seem reactive and slow.”

He retained a ‘buy’ rating on BP, noting potential upside if it were to resolve lawsuits over the Macondo well disaster in the Gulf of Mexico, but added: “Frankly, BP shares now suffer a management as well as a Macondo discount.”

A spokesman for BP said it had set out “very clear targets and milestones for the next few years”.